Sustainable Development and Regional Economics

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Today’s Creative Destruction

The focus of economies in the Industrial Era was maximization of production, pure and simple. Huge advances in mechanization allowed for steady growth in output, but also created a slew of negative externalities that are all familiar to us now: polluted natural systems, deteriorated human health conditions, dramatic systemic changes brought on by the accumulation of carbon in the atmosphere.

The post-Industrial Era has been characterized by a shift in norms toward a more holistic approach to the economy; one which tries to include human and environmental concerns in its calculation of the bottom line. But while this transition is on-going, it is far from complete. Transitioning to a more sustainable economic system can be done in two ways: by reducing the amount of people, thereby reducing the demand for goods and services; or by increasing the efficiency of production. When economists discuss the today’s problems and explore possible solutions, they rarely advocate population reduction as a viable or desireable method. In fact, current projections suggest that global population will grow to approximately 11 billion before leveling off.

So increasing economic efficiency is the enticing alternative to a sustainable future. Of course, this is another type of reduction: the reduction of the marginal cost of production. Computing has been one of the greatest tools in achieving the economic gains of the present, and it has done so by increasing the efficiency throughout the global economy (the distribution of the benefits of digtial technology is another matter). But computing has a problematic byproduct: unemployment. As the capacity for jobs to be automated advances, human workers forced to find new means of income. This concept, known as creative destruction, suggests that workers are resilient and therefore the unemployment created by technological advances will be temporary.

But today there is growing concern that a large part of today’s workforce will be unable to adequately adapt themselves to the systemic changes introduced by automation. The trucking industry provides an apt example of this dilemma. 2012 US Bureau of Labor Statistics cite 1.7 million long-haul trucking jobs in America. This career has a median salary of $38K, which is more than triple the federal poverty limit for a household of one person in 2012. It requires no advanced degree and only limited short-term on-the-job-training. This is a classic example of the type of accessible living-wage career opportunity upon which the American Dream is founded.

But in Mountain View, CA, work is underway that could threaten the future of truck drivers in the US and around the world. Google has invested heavily in developing the technology required to automate driving. These “self-driving” vehicles promise a range of efficiency improvements: better gas mileage, fewer accidents, lower overall costs of implementation, etc.

What happens to the employment economy when many of these accessible careers are diminished by firms investing in robotics and other forms of automation? What policy provisions can be levied to counteract job loss as the economy increases its drive for further efficiency? At some point, the post-Industrial society will need to grapple with the relationship between efficiency and equity; only at that point will policy begin to address these problems.